Tighter Internet sales tax collections approved

LANSING – Amazon.com and other online stores will have to collect Michigan's sales tax on purchases under legislation headed to Gov. Rick Snyder.

The bills are intended to level the playing field for brick-and-mortar businesses that must assess the 6 percent tax on customers.

The legislation won final approval in the Republican-controlled Legislature early Friday morning — 83-27 in the House and 25-13 in the Senate. Once the bills are signed by the Republican governor, they will take effect in October.

Wal-Mart and other Michigan stores must collect the sales tax when selling items over the Internet.

Shoppers are supposed to voluntarily pay unassessed taxes on Internet, catalog and telephone-order purchases when they file their state tax returns. But few taxpayers comply.

The bills could generate around $50 million a year from Amazon, Overstock, eBay and other Internet retailers with a "nexus" to the state.

They aren't specifically linked to a road funding plan headed to the May ballot. But talk of boosting funding for transportation and education in the negotiations gave the so-called "Amazon" bills a boost.

Michigan Retailers Association President and CEO James Hallan hailed the legislation, calling it a big victory for the "home team." He said Michigan will join more than two dozen other states that have taken similar action.

"Main Street fairness is good for Michigan's economy, good for our local communities, good for our consumers and good for our retail businesses," Hallan said in a statement.

"It has made no sense for government to give an advantage, at the expense of companies here in Michigan, to out-of-state businesses that don't invest in this state, don't create Michigan jobs, don't pay local and state taxes, and don't support local communities and organizations," he said.

Conservative activists have said the measure is a tax increase that would raise prices.

The state Treasury Department estimates $445 million in sales and use tax revenue from remote purchases will go uncollected this fiscal year, nearly two-thirds of it from e-commerce. Michigan and other states can't get at a lot of it without the approval of federal legislation.